Chart Busters: Top trading set-ups to watch out for Wednesday.

Chart Busters: Top trading set-ups to watch out for Wednesday.
by 5paisa Research Team 06/10/2021

The benchmark index Nifty has witnessed follow up move after the formation of a Morning Star like candlestick pattern. Interestingly, the index has retraced more than 61.8% of its prior downward move which is started from all time high level of 17947.65 to the low of 17452.90 level.

Here are the top trading set-ups to watch out for Wednesday.

Ador Welding: The stock has formed a Gravestone Doji candlestick pattern as of July 16, 2021, and thereafter witnessed correction along with low volume. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move, and it coincides with its 13-week EMA level. On Tuesday, the stock has given a 31-days consolidation breakout on the daily chart. The volume was expanded by over 5 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 16145 while today the stock has registered a total volume of 83200. Interestingly, the daily RSI has also given a consolidation breakout, which is a bullish sign. The weekly RSI has given bullish crossover in the super bullish zone. Recently, the daily MACD line just crossed the signal line, and the histogram became green. On the daily timeframe, ADX is 12.20 and suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI. Hence, we would advise the traders to be with a bullish bias. On the downside, the zone of Rs 665-Rs 680 is likely to act as crucial support for the stock. While on the upside, the level of Rs 782 may act as immediate resistance for the stock.

Bhageria Industries: The stock has formed Doji candlestick pattern as on the weekend of July 23, 2021, and thereafter witnessed correction. The correction is halted near the 50% Fibonacci retracement level of its prior upward move, and it coincides with the 20-week EMA level. The stock has formed a strong base near the 20-week EMA and thereafter initiated its upward journey. On Tuesday, the stock has given cup pattern breakout on the daily chart. The length of the cup pattern was 10-weeks, and the depth of the pattern was about 26%. This breakout was supported by robust volume. Additionally, the stock had formed an opening bullish Marubozu candle on breakout day, which adds strength to it. The opening bullish Marubozu candle has no shadow extending from the open price end of the body. Opening bullish Marubozu candle indicates extreme bullishness. The momentum indicators and oscillators are also suggesting bullish momentum. The weekly RSI has taken support near the 60 zone and bounced sharply. The daily RSI has surged above its prior swing high. The daily MACD stays bullish as it is trading above its zero line and signal line. Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. Going ahead, the zone of Rs 280-Rs 271 level is a crucial support area and the level of Rs 350-Rs 355 is a resistance. zone.

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Here’s what you need to know before the market opens on October 06, 2021.

Here’s what you need to know before the market opens on October 06, 2021.
by 5paisa Research Team 06/10/2021

Opening Bell: Here’s what you need to know before the market opens on October 06, 2021.   

Moody’s has upgraded its outlook on India’s Sovereign ratings to stable from negative.

Indian equity markets are likely to start Wednesday with a slightly negative bias as the SGX Nifty is seen trading down by 28.50 points or 0.16% at 17,790 levels. However, like in the recent past, we have seen dips are being bought, and expect a similar kind of trend to continue on Wednesday as well. The big news which could act as music to the ears of the bulls is that rating agency Moody’s has upgraded its outlook on India’s sovereign ratings to stable from negative.

Cues from Asian markets: Majority of the Asian stock markets were trading in red on Wednesday. Japan’s Nikkei 225 was down by 0.96% and Hong Kong’s Hang Seng has shed 0.93%.

Overnight cues from US markets: It was a green day on Wall Street as all three major US stocks indices ended the session in positive terrain. A report released indicated that the US service sector surprisingly grew a tad faster in September. The tech-heavy Nasdaq led from the front as it jumped 1.3% followed by S&P 500 and the Dow which added 1.1% and 0.9%, respectively. Usually, it is believed that bonds yield and stock price have an inverse relationship to each other, however, on Tuesday both bond yields and the stock price rose. The 10-year US Treasury bond yield moved above 1.5%.

Last session summary: On Tuesday, Indian benchmark indices ended in green for a second straight day. The Sensex and Nifty closed up by 0.75% and 0.74%, respectively. Reliance Industries and TCS combinedly contributed nearly 56 points to Nifty’s kitty.

Among the sectoral indices, Nifty Energy and IT were the top gainers. On other hand, Nifty Realty and Nifty Pharma were top losers.

FII’s and DII’s activity on Tuesday: FIIs were net sellers to the tune of Rs 1,915.08 crore on Tuesday. On other hand, DIIs were net buyers to the tune of Rs 1,868.23 crore.

Important corporate events to watch out for: Board Meeting of Nazara Technologies and Inox Wind is scheduled on October 6 to consider fundraising and other business matters.

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5 Stocks to Buy Today: October 6, 2021

5 Stocks to Buy Today: October 6, 2021
by 5paisa Research Team 06/10/2021

Every morning our analysts scan through the markets universe and chose the best momentum stocks to buy today. The stocks are recommended from a wider list of momentum stocks and only the best ones make it to the top 5 list. We also update on the performance of earlier recommendation every morning to help you with your trading journey. Read on to know the momentum stocks to buy today. The average holding period could be between 7-10 days on average.

List of 5 Stocks to Buy Today October 6

1. Nazara Technologies (NAZARA)

Nazara Technologies Stock Details for Today

- Current Market Price: Rs.2,849

- Stop Loss: Rs. 2,430

- Target 1: Rs. 2,560

- Target 2: Rs. 2,655

- Holding Period: One week

5paisa Recommendation: Our technical experts see end in sideways move of the stock hence making this stock best stock to buy.

 

2. MSTC LTD (MSTCLTD)

MSTC LTD Stock Details for Today: 

- Current Market Price: Rs. 331

- Stop Loss: Rs. 323

- Target 1: Rs. 340

- Target 2: Rs. 353

- Holding Period: 1 week

5paisa Recommendation: Our technical experts expects further buying in the stock and recommends buying this stock.

 

3. SBI LIFE (SBILIFE)

SBI LIFE Stock Details for Today: 

- Current Market Price: Rs. 1,262

- Stop Loss: Rs. 1,225

- Target 1: Rs.1,294

- Target 2: Rs. 1,330

- Holding Period: 1 week

5paisa Recommendation: Positive momentum in stock is expected and thus making this stock as one of the best stocks to buy today.

 

4. INDUSIND BANK (INDUSINDBK)

INDUSIND BANK Stock Details for Today: 

- Current Market Price: Rs. 1,169

- Stop Loss: Rs. 1,134

- Target 1: Rs. 1,200

- Target 2: Rs. 1,240

- Holding Period: 1 week

5paisa Recommendation: Positive momentum in stock is expected and thus making this stock as one of the best stocks to buy today.

 

5. Vinati Organics (VINATIORGA)

Vinati Organics Stock Details for Today: 

- Current Market Price: Rs. 2,024

- Stop Loss: Rs. 1,972

- Target 1: Rs. 2,070

- Target 1: Rs. 2,164

- Holding Period: 1 week

5paisa Recommendation: Our technical experts see strong volume in this stock hence making this stock best stock to buy.

 

Share Market Today

SGX NIFTY: 

SGX Nifty indicates positive opening for Indian markets. SGX Nifty is at 17,789.80 levels, higher 74.75 points. (Updated at 7:46 AM).

International Markets:

US Market: US markets bounce back with Dow Jones closing higher by 300 points while Nasdaq gains 1.25% as it sees short covering from oversold levels.

The rotation of money from big technology stocks into energy and financials may continue in the short term which could see more volatility ahead. Bond yields rise to 1.54% even as the US$ index regains strength to hit 3-month highs at 94.07.

Asian Market: Asian markets opened in the red led by the Japanese 'Nikkei' which continues to struggle for direction as it trades lower by 200 points in early trade.

South Korea and Taiwan markets also struggle as technology stocks overhang in the US hurts sentiment in Asia. Chinese stocks have been on holiday for this week and could set the tone for Asian markets next week.

Disclaimer: The above report is compiled from information available on the public platforms.

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SIP Performance: Canara Robeco Bluechip Equity Fund – Direct Plan.

SIP Performance: Canara Robeco Bluechip Equity Fund – Direct Plan.
by 5paisa Research Team 06/10/2021

Canara Robeco Bluechip Equity Fund is one of the highly rated equity funds within the category and has outperformed its benchmark in a 3, 5 and 7 year period.

An individual has various options available in the market in which he can invest his money. Every individual has a different level of income. Some of them have lower income, some are moderate-income earners, while some have higher income. The investment amount also varies according to the level of income an individual possesses. An individual with lower income or moderate-income levels cannot invest higher amounts regularly or they cannot dedicate a huge lump-sum amount at a single point in time. Hence, mutual funds offer investors to invest in amounts as small as Rs 500, which aids small as well as a big investor to get the habit of investing.

This encourages youngsters i.e. individuals who start their journey of earnings to invest right from a young age. It also enables the creation of a large corpus if investors invest for a longer time. Individuals, who are at an early stage of earning, have a high-risk capacity as compared to mid-earning or pre-retirement and retirement stage investors. So, investors with high-risk capacity can invest the amount in equity-related schemes in their early stage and further, can shift some proportion to debt once they get decent returns from the equity markets.

Now let’s look at the SIP performance of Canara Robeco Bluechip Equity Fund which is a large-cap fund investing in the 1st-100th company in terms of full market capitalization. This fund is outperforming its benchmark in 3, 5 and 7-year periods and it is the highest-rated fund within its category. All rating agencies such as CRISIL, Morningstar and Value Research have five rated this fund. If you had invested just Rs 1,000 every month i.e. Rs 12,000 per annum from October 1, 2018, till the present date i.e. October 6, 2021, then the worth of your investment would have been Rs 58,070 as against the amount invested of Rs 37,000. The following graph depicts the growth of the above investment.

 
Now the question arises, what rate of return would the above investment deliver? Let’s look at the same:

 

As we could see the calculation, if you had invested Rs.1000 every month for three years you would have received 29.34% return.

Top 5 holdings of Canara Robeco Bluechip Equity Fund – Direct Plan:

Company Name  

Assets %  

HDFC Bank  

7.87%  

ICICI Bank  

7.05  

Infosys  

6.95  

Reliance Industries  

6.28  

HDFC  

4.72  

The top 3 sector allocation of the fund is:

Sector Name  

Allocation %  

Financial  

34.14  

Technology  

15.15  

Energy   

8.31  

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Investment dilemma: Should you go for VIP or SIP.

Investment dilemma: Should you go for VIP or SIP.
by 5paisa Research Team 06/10/2021

Value-averaging investment plan helps investors to follow ‘buy low and sell high’ and achieve their financial goal in a pre-determined time frame.

The age-old wisdom of "buying low and selling high" is the only way you make money in the equity market. But for various reasons, be it behavioural and otherwise, fail to follow. However, there is a concept called Value Averaging Investment Plan (VIP) that utilizes the same concept to make money for you.       

What is a Value Averaging Investment Plan (VIP)

Investment in VIP is very much like the much-publicized SIP where you invest every month in a chosen mutual fund at a pre-determined frequency. However, the amount you invest is not constant and keeps on changing in VIP according to the market performance. Under VIP you set a target value of your portfolio that you want to achieve at the end of a period. Now you work backwards to achieve that target investment value every month.

Example

If as an investor you want to buy a car 12 months from now, that is valued at Rs 600000. Working backwards, you need to save and invest at least Rs 50,000 per month over the year in your mutual fund portfolio (For simplicity we are assuming no returns). In the first month, you invested Rs 50,000. In the second month, your fund performed better and now your fund value increased to Rs 51,000. Now in the second month, you need to invest only Rs 49,0000 as this will add up to Rs 1,00,000. In the third month, however, the market nosedived, and the investment value declined to Rs 98,000. Now to make up his portfolio value to Rs 1,50,000, the investor needs to invest Rs 52,000.

The above example clearly shows that when the market is high, VIP makes us invest less, while it forces us to invest more when the market is low, helping us to follow the classical strategy of “buy low and sell high”. One drawback of this strategy is you do not know beforehand what is amount you need to invest every month. Hence, you need to have extra liquidity to cover up any shortfall. Another disadvantage of VIP is that you may not invest during the bull run. This is the case in the current scenario where in the last one year Nifty 50 has increased by 53% or around 4% every month. So, depending upon your requirement, every month you will continue to contribute less towards your goal.

Nonetheless, VIP is mostly used by investors to achieve a target value for some specific purpose, like a car in the above example.

 

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Economic Update: Government Policy announcements in September 2021.

Economic Update: Government Policy announcements in September 2021.
by 5paisa Research Team 06/10/2021

Pro-growth government policies in September 2021 are propelling domestic stock markets higher.

The month that went by has seen the Indian Government taking several steps to offer relief to the telecom companies under pressure by large regulatory dues and attract foreign capital to the telecom sector.

The Union Cabinet approved a set of nine structural and procedural reforms to address the short-term liquidity needs as well as long-term issues of telecom companies. These measures included a relief on computing dues relating to AGR, adjusted gross revenue, a four-year moratorium on dues, and the option for the government to convert dues into equity after the moratorium period expires are key elements of the relief package approved by the Union cabinet. Vodafone India which has a debt of close to 1.9 lakh crore is likely to be a key beneficiary.

The cabinet also liberalized foreign ownership rules in the telecom sector by allowing 100% foreign direct investment through the automatic route. Currently, 100% FDI is allowed in the sector, but only 49% was on the automatic route, and any investment above that limit required government approval.

Another major announcement in September was the approval of a Rs 26,058 crore production linked incentive (PLI) scheme for auto, auto-components and drone industries to enhance India’s manufacturing capabilities. The incentive structure is expected to encourage the industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products. According to government sources, it is estimated that over five years, the PLI Scheme for Automobile and Auto Components Industry will lead to a fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore, while at the same time creating additional employment opportunities of over 7.5 lakh jobs.

Meanwhile, India’s manufacturing sector activities picked up in September 2021 as the easing of Covid restrictions helped in strengthening demand. The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) improved from 52.3 in August to 53.7 in September – indicating an expansion in business conditions across the manufacturing sector. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction. The expansion in Manufacturing PMI in September marks the third straight month of improvement in business conditions.

Economists believe that the Reserve Bank of India (RBI) is expected to continue with its accommodative stance in its October 6 to 8 monetary policy discussions. No surprises on the policy rate front are expected, especially at a time when the economy is expected to see the much-awaited boost in consumption triggered by the festive demand. Inflation as per the latest poll is forecast to be well above RBI's medium-term target of 4% but was projected to remain below the 6% upper threshold until at least end-2024.